Accounting For Branch?

Accounting for Branch

Concept of Branch

As a describe organisation flourishes, it move necessary to opened upward up branches inward diverse other towns, cities too districts inward other to marketplace its services/products which results inward the increment of its profits. Influenza A virus subtype H5N1 branch is to a greater extent than often than non defined equally a department of an enterprise that is geographically separated from the ease of the business. The activities of the branch are controlled yesteryear a caput business office too usually it carries on the same functions equally of the enterprise. In other words, when the describe organisation grows inward size due to increased production or sale, the large organisation to a greater extent than often than non laid upward local retail store known equally branches which are percentage of the fundamental office, called to caput business office that controls al the branch. Head officers, therefore, a house from which the branches are controlled. The thought behind opening a branch is to eliminate firms which yesteryear going equally nearer to the unlimited customers equally possible. Well known illustration of describe organisation firms which operate through branch are: Golchha organization, IEIIT Group, Best undertaking search center, diverse commercial bank, etc.

It should hold upward mentioned that a branch is non a split upward legal entity; it is just a segment of a business. From an accounting standpoint, a branch is a clearly identifiable turn a profit center. In other to practise greater command over the branch, it is necessary to ascertain turn a profit or loss made yesteryear such branches separately. Apart from this, specialization accounting techniques accept to hold upward adopted for controlling diverse branch activities too for their polish running, both at the caput business office level.  The scheme of accounting varies amidst unlike enterprise inward accordance alongside their type of activities, methods of functioning too the preference of their managements.

Types of branch

Generally, inward society to report accounting systems adopted for diverse branch, it is necessary to assort branches inward the next categories:

• Dependent Branch
• Independent Branch
• Foreign Branch

1.      Dependent Branch

When the policies too direction of a branch are totally command yesteryear the caput officer, so such branch is called a subject branch. It does non maintain its accounts. Head office maintains accounts of all the transactions of such branch. This type of branch depends alongside caput business office for all its transactions. This branch received goods from caput business office too makes cash too credit sales. All sales proceeds are sent to caput business office too caput business office sends sum separately for its expenses. Generally, petty cash fund to maintained fort the petty expense in that location are ii types of subject branch:

1. Services branch: this branch executes or books orders on behalf of the caput office. After receiving society from this branch, caput business office supplies goods straight to the customers according to the orders received from the branch.
2. Retail selling branch: this branch straight sells goods received from caput business office to customers.

1.      Independent Branch

When the size of the branches is rattling large, their functions volition move complex. In such a situation, it is desirable or practicable for each branch to flora its ain double entry book-keeping scheme quite split upward from those of caput office. Under this system, the branches are treated equally split upward independent units.

As independent branch Is given to a greater extent than liberty equally activity alongside the managing director acquiring to a greater extent than responsibility. Apart from receiving goods shape the caput office, these branches are allowed to buy goods from the opened upward marketplace locally. From the sum received from cash sales or debtors, they tin bathroom incur expenses too tin bathroom operate the banking concern describe organisation human relationship inward their ain name. The exclusively link too independent branch alongside the caput business office is that they are owned yesteryear the caput office, because the latter provides too physical care for the premises too other physical assets which a branch needs earlier it tin bathroom move operational, too the turn a profit or loss of the branch unitedly belong to the caput office.

2.      Foreign Branch

When a branch is established inward unopen to other country, it is called a unusual branch. The accounting arrangements for a unusual branch are precisely the same equally for whatsoever independent, upward to the trial balance. In society to contain the Trial Balance of forging branch inward the books of the caput office, it must hold upward converted into the currency of the caput office.

Accounting Records of Dependent branch inward the Books of Head Office

Head business office may shipping goods to branch either at 'cost price' or 'selling price' (also called invoice price). The accounting procedures inward these ii cases are slightly different; therefore, these are discussed separately as:

1. Goods shipping at cost price
2. Goods shipping at marketplace price

Goods sent at cost price

Under this method at the showtime of the year, the branch describe organisation human relationship is debited alongside the opening residual of assets such equally stock, debtors, petty cash, furniture, prepaid expenses accrued income, etc, lying alongside the branch. Similarly it is credited alongside the opening residual of liabilities of branch such as, creditors, outstanding, salaries, rent, etc.

The branch describe organisation human relationship is so debited alongside the sum of goods sent to the branch too other amounts remitted to come across diverse expenses such as, salaries, rent too taxes, etc. likewise, the Branch describe organisation human relationship is credited alongside the render of yesteryear the branch, too receipts from debtors too cash sales. At the destination of the year, branch describe organisation human relationship is debited alongside the closing values of liabilities too credited alongside the closing value of assets. The departure betwixt ii sides represents turn a profit or loss for the branch for a item period:

The inward a higher house mag entries are posted inward the branch account. The specimen of branch describe organisation human relationship equally following:

Under this method caput business office does non include the next items piece preparing branch account.

1. Normal Loss
2. Credit sales made yesteryear branch
3. Collection from debtors
4. Bills receivable from debtors to branch
5. Bills receivable from debtors to branch dishonouured
6. Bad debts of branch
7. Discount, allowances too committee allowed to customers yesteryear branch
8. Goods returned yesteryear customers to branch
9. Expenses paid yesteryear branch
10. Depreciation on fixed assets
11. Profit or loss on sales of fixed assets

If caput business office wants to know opening too closing debtors to a greater extent than amounts received from debtors or credit sales, so it prepares Branch Debtors Account equally under:

1.      Goods sent at marketplace price

Sometimes, caput business office may prefer to shipping goods to the branch at a higher cost than the cost. When caput business office does so, so it is termed equally 'goods sent at invoice cost or marketplace price'. Method of sending goods at invoice cost is first-class from the betoken of sentiment of stock control. As the goods are invoice at selling price, the caput business office tin bathroom dictate pricing policy to its branches, equally good equally relieve piece of job at the branch, because cost accept already been decided. Invoicing at selling cost is to a greater extent than often than non done, where goods are of measure type pre-packed too probable to fluctuate inward price. Where caput business office has piffling command over selling cost (as for example, alongside perishable goods similar fruits, fish, milk, etc.), the almost suitable method is that margin of turn a profit a surreptitious from the branch manager.

The method of grooming of branch describe organisation human relationship is the same equally inward the cost cost method, excepting that all mag entries relating to the goods (opening stock, goods sent to branch, goods returned to caput business office too closing stock) are made at invoice cost too proper adjustments for loading (difference betwixt cost cost too invoice price) are made at the destination of the accounting menstruum yesteryear passing unopen to next additional entries.

Accounting Records of Independent Branch inward the Books of Head office

In the illustration of independent branch, the accounting arrangements are quite simple. Each branch maintains a "Head Office Account" inward its Ledger, whilst the caput business office maintains an describe organisation human relationship inward the shout out of each branch, just equally if private branch were customers of its. All transactions betwixt the ii are passed thought these account, which, if book-keeping is upward to appointment too accurate, volition accept equal too contrary balances.

Influenza A virus subtype H5N1 caput business office describe organisation human relationship inward the branch business office books may accept the next entries:

Accounting Entries for incorporation Branch Transaction inward the Books of Head Office too Consolidated residual sheet

At the destination of each fiscal or accounting period, a branch both sends its trail residual to caput business office for grooming of Trading too turn a profit too loss describe organisation human relationship too Balances canvas or prepares its ain finally accounts (head business office beingness shown equally a debtor or a creditor equally appropriate). In either case, the cyberspace turn a profit made yesteryear a branch is credited to caput business office account, cyberspace loss, on the hand, is debited to that describe organisation human relationship inward the branch books. In this connection, it should hold upward noted that the turn a profit or loss made yesteryear each branch is transferred to caput business office (by passing the inward a higher house entry), instead of beingness distributed inward the normal agency equally alongside a unmarried entry enterprise.

After receiving branch Trial residual yesteryear the caput office, it keeps all the records of the branch Trial Balance on its ain books which is called incorporation of branch Trial Balance. Generally, such incorporation is done inward the next ii ways:

1. Incorporation of all the items inward Trial Balance
2. Incorporation of cyberspace turn a profit or loss, assets too liabilities of branch

INCORPORATION  OF ALL THE ITEMS IN TRIAL BALANCE

While incorporating all the items inward Trial Balance, the next mag entries are made inward the books of caput office:

Head business office tin bathroom too educate a consolidated residual canvas incorporating all assets too liabilities of it on too its branch.

Accounting Treatment of unopen to of import Adjustments

1. Normal loss: when goods are lost or damaged due to ordinarily expected but unavoidable campaign such equally leakage of crude oil or ghee, evaporation, shortage of coal, flours or vegetable due to ladling too weighing, drying, etc., it is called normal loss. Such normal loss  increment sum of cost of goods sold of the production too it is non needed to maintain its tape separately
2. Abnormal Loss: loss of goods due to the accident or negligence is called abnormal loss. It is unexpected too beyond the command of the human of affairs e.g., loss of goods due to fire. Flood, earthquakes, war, reason in-crusts or yesteryear theft, etc. such type of loss tin bathroom hold upward avoided yesteryear efficient management. If in that location is abnormal loss of goods sent yesteryear caput office, the valuation of such abnormal loss should hold upward done too recorded. 
3. Goods inward transit: it is quite mutual that the caput business office too the branch shipping goods to each other rattling frequently. Head business office sends goods to the branch at regular intervals equally per the requirement of the branch too branch aslso returns to the caput business office which it cannot sell at a profit. When the caput business office sends goods to the branch, it forthwith debits the branch describe organisation human relationship inward its books too credit the goods sent to branch account. But the branch volition transcend entry (in abide by of this transaction) exclusively when it receives the goods. Similarly, when branch sends or render unopen to goods to the caput office, it forthwith debits caput business office describe organisation human relationship too credit goods suppliers yesteryear caput business office account. But the caput business office volition transcend entry (in abide by of this transaction), exclusively when it receives the goods. These goods, which are on the agency to branch or caput office, are called goods-in-transit.
4. Cash-in-transit: branch may shipping cash to caput business office at regular intervals. At the destination of the accounting period, if in that location is whatsoever cash-in-transit it should hold upward adjusted just similar goods-in-transit. In this situation,  over again adjustment entries are made either inward the caput business office books or inward the branch books.
5. Inter branch transactions: it is quite possible that i branch may shipping goods (or cash) to unopen to other branch directly, alongside of course, the consent of the caput office. The green procedure, In such a illustration is that the caput office, inward its books, should debit the receiving branch too credit the sending branch. But inward the books of the branch, it regard the transactions equally returning the goods to the caput business office too thereafter sending the goods to unopen to other branch. For example, a company's caput business office at Kathmandu operates ii branches; i of these inward Lahan, Siraha too unopen to other i is inward Mid-Baneshwor. Some of the goods are sent to Mid-Baneshwor branch yesteryear Lahan, siraha Branch.

Incorporation of cyberspace turn a profit or loss, assets too liabilities of Branch

Under this method, all the items or Trial Balance of Branch are non incorporated yesteryear caput office, but it incorporates exclusively the cyberspace turn a profit or loss too items of assets too liabilities inward its books.

Review of Theoretical Concept:

Write the pregnant of branch:

When the describe organisation grows inward size due to increased production or sales, the large organizations to a greater extent than often than non laid upward local retail store known equally branches which are percentage of the fundamental office, called the caput business office that controls all the branches. Head office, therefore, a house from which the branches are controlled he thought behind opening a branch is to climate customers equally nearer to the ultimate customers equally possible. Well known examples of describe organisation firms which operate through branches are IEIIT Organization, Best undertaking search center, sales diverse commercial banks etc.

Describe the type of branch.

There are iii types of branch:

1. Dependent branch:  when the polices too direction of a branch are totally controlled yesteryear the caput office, so such branch is called a subject branch. It does non maintain its accounts. Head business office maintains accounts of all the transactions of such branch. This type of branch depends alongside caput business office for all its transactions. This branch received goods from caput business office too makes cash too credit sales. All sales proceeds re sent to caput business office too caput business office sends sum separately for its expenses. Generally, petty cash fund is maintained for the petty expenses.
2. Independent Branch

 When the size of the branches is rattling large, their functions volition move complex. In such a situation, it is desirable or practicable for each branch to flora its ain double entry book-keeping scheme quite split upward from those of caput office. Under this system, the branches are treated equally split upward independent units.

An independent branch is given to a greater extent than liberty equally activity alongside the managing director acquiring to a greater extent than responsibility. Apart from receiving goods shape the caput office, these branches are allowed to buy goods from the opened upward marketplace locally. From the sum received from cash sales or debtors, they tin bathroom incur expenses too tin bathroom operate the banking concern describe organisation human relationship inward their ain name.

1. Foreign Branch

When a branch is established inward unopen to other country, it is called a unusual branch. The accounting arrangements for a unusual branch are precisely the same equally for whatsoever independent, upward to the trial balance. In society to contain the Trial Balance of forging branch inward the books of the caput office, it must hold upward converted into the currency of the caput office.

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